The Fed’s Inflation Target Will Remain 2%

Apollo Chief Economist

The Fed is not going to increase the inflation target from 2% to, say, 3% or 4%, see also Powell’s response below from the press conference on Wednesday.

GRADY TRIMBLE. Thank you, Mr. Chair. Grady Trimble with Fox Business. You’ve reiterated today and the Committee has reiterated its commitment to that 2% inflation target. I wonder, is there ever a point where you actually reevaluate that target and maybe increase your inflation target if it is stickier than even you think it is?

CHAIR POWELL. That’s just — changing our inflation goal is just something we’re not — we’re not thinking about, and it’s something we’re not going to think about. It’s — we have a 2% inflation goal, and we’ll use our tools to get inflation back to 2%. I think this isn’t the time to be thinking about that. I mean, there may be a longer run project at some point. But that is not where we are at all. The Committee, we’re not considering that. We’re not going to consider that under any circumstances. We’re going to — we’re going to keep our inflation target at 2%. We’re going to use our tools to get inflation back to 2%.

For more, see also the Fed’s official transcript from the press conference here.

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